Obama Wants $190 Billion Tax Increase on Companies

yahoo ^

[keep your powder dry]

May 4 (Bloomberg) -- President Barack Obama proposed to raise about $190 billion over the next decade by outlawing three offshore tax-avoidance techniques used by U.S. companies such as Caterpillar Inc. and Procter & Gamble Co. He also would make it riskier for Americans to stash money in tax-haven banks.

The tax system is “full of corporate loopholes,” Obama said at the White House today, as he outlined the plan along with Treasury Secretary Timothy Geithner. The tax proposals, which will be part of a detailed budget the administration releases later this week, would raise a total of about $210 billion over the next decade.

[Nachum]

The List, ping

[tc45a]

Incorrect. Seasonally adjusted Annualized Starts were 510,000 in March compared to 572,000 in February.

You are right-I stand corrected.

By Courtney Schlisserman and Sho Chandra

May 4 -- Pending sales of U.S. existing homes posted their first back-to-back gain in almost a year in March and construction spending ended a six-month slide, spurring a rally in stocks and sell-off in Treasuries

[tc45a]

troll

The economy is showing signs of improvement in spite of obama. Third time I said it.

[tc45a]

Socialism is destroying and will destroy the economy. The economy cannot do well when socialism is imposed. The economy cannot do well when trillions of tax payers money are wasted on welfare and other stupid government programs such as education and health care and all this within the first 100 days of the Obama administration. The economy cannot do well when Obama is going to impose trillions of dollars in extra taxes on people.

I agree to all above but the economy is greater than obama.

You do not think that socialism is a problem because you are a socialist.

Show me one post where I am pushing for socialism. I'm not. All I have been saying all along is the economy is showing signs of improvement (in spite of obama-4th time I said it) and you call me a troll liberal socialist.

[Wyatt's Torch]

Home sales are good...thanks to record decline in prices thanks to foreclosures. We are still well over 18 months away from any rebound in housing construction. We will remain in the 500,000 - 600,000 range of starts throughout FY 2009 and at lease through mid-FY 2010. There is just too much inventory.

BTW the historical average for housing starts from 1959 - 2009 is 1.5 million. Current levels are 34% of the average over the 50 year time horizon.

[businessprofessor]

It seems that you are arguing that corporations will pay the tax, not individuals. In the short run, I agree that corporations may not be able to pass on the increased costs of taxation. In the long run, the entire industry will adjust and the costs will be borne by the consumers. Corporations that do not pass on the increased cost will fail.

[tc45a]

I agree. That being said I think we are inching up from the bottom.

[Loyal Buckeye]

Obama Wants $190 Billion Tax Increase on Companies.

Newsflash: CORPORATIONS DON'T PAY TAXES, PEOPLE DO.

[sfvgto]

between this and the carbon tax, the only thing left to buy will be Fiat’s

[St. Louis Conservative]

I know some of the oil supermajors like Chevron & Exxon have made grumblings about moving to Switzerland, similar to how Halliburton moved its headquarters to Dubai. Why put up with rapacious, greedy, power-mad politicians in this country?

[anglian]

Obama’s ‘Patriot’ Act
No, we’re not talking about Barack Obama’s opposition to the post-9/11 antiterror law. We’re referring to the Senator’s support for something called the Patriot Employer Act, which deserves more attention as an indicator of his economic agenda.

Along with Democratic co-sponsors Sherrod Brown and Dick Durbin, Mr. Obama introduced the bill in the Senate in August 2007. Recently in Janesville, Wis., he repeated his intention to make it a priority as President: “We will end the tax breaks for companies who ship our jobs overseas, and we will give those breaks to companies who create good jobs with decent wages right here in America.”

Mr. Obama’s proposal would designate certain companies as “patriot employers” and favor them over other, presumably not so patriotic, businesses.

The legislation takes four pages to define “patriotic” companies as those that: “pay at least 60 percent of each employee’s health care premiums”; have a position of “neutrality in employee [union] organizing drives”; “maintain or increase the number of full-time workers in the United States relative to the number of full-time workers outside of the United States”; pay a salary to each employee “not less than an amount equal to the federal poverty level”; and provide a pension plan.

In other words, a patriotic employer is one which fulfills the fondest Big Labor agenda, regardless of the competitive implications. The proposal ignores the marketplace reality that businesses hire a work force they can afford to pay and still make money. Coercing companies into raising wages and benefits above market rates may only lead to fewer workers getting hired in the first place.

Under Mr. Obama’s plan, “patriot employers” qualify for a 1% tax credit on their profits. To finance this tax break, American companies with subsidiaries abroad would have to pay the U.S. corporate tax on profits earned abroad, rather than the corporate tax of the host country where they are earned. Since the U.S. corporate tax rate is 35%, while most of the world has a lower rate, this amounts to a big tax increase on earnings owned abroad.

Put another way, U.S. companies would suddenly have to pay a higher tax rate than their Chinese, Japanese and European competitors. According to research by Peter Merrill, an international tax expert at PriceWaterhouseCoopers, this change would “raise the cost of capital of U.S. multinationals and cause them to lose market share to foreign rivals.” Apparently Mr. Obama believes that by making U.S. companies less profitable and less competitive world-wide, they will somehow be able to create more jobs in America.

He has it backwards: The offshore activities of U.S. companies tend to increase rather than reduce domestic business. A 2005 National Bureau of Economic Research study by economists from Harvard and the University of Michigan found that more foreign investment by U.S. companies leads to greater domestic investment, and that U.S. firms’ hiring of more offshore workers is positively, not negatively, associated with the number of American workers they hire. That’s in part because often what is produced overseas by subsidiaries are component parts to final, higher-value-added products manufactured here.

Mr. Obama is also proposing to raise tax rates on affluent individuals, as well as on capital gains and dividends. This would also lead to more capital and jobs leaving the U.S. The after-tax return on U.S. investment would fall appreciably if these tax hikes were adopted, and no amount of tax-credit subsidy will keep capital from fleeing to lower tax jurisdictions.

If the U.S. didn’t impose the second highest corporate income tax rate in the world, companies would have less incentive to move jobs overseas. Rather than giving politically correct companies a 1% tax credit, it makes more sense to reduce the U.S. corporate tax rate for everyone — by at least 10 percentage points to the global average.

Economists have long understood that companies don’t really pay taxes; they merely collect them. A study by the American Enterprise Institute has shown that U.S. workers bear the cost of the corporate income tax in lower wages and salaries. To borrow Mr. Obama’s language, what’s really unpatriotic is the 35% U.S. corporate tax rate.

Posted by Dick mcdonald http://dickmcdonald.blogspot.com/

[pleasenoobama]

It seems that you are arguing that corporations will pay the tax, not individuals. In the short run, I agree that corporations may not be able to pass on the increased costs of taxation. In the long run, the entire industry will adjust and the costs will be borne by the consumers. Corporations that do not pass on the increased cost will fail.

This is obviously true for a per unit tax, because the marginal cost of units would increase, but a corporate income tax is a lot different from a per unit tax. Because corporate income taxes are on profits and not goods, the equilibrium price of goods should not change. The costs will rather be borne by the investors, which will decrease savings and investment incentives and thus hurt the economy in the long run but for entirely different reasons than prices seen by consumers. I already know, understand, and agree with the economic argument that some of the costs of per unit producer taxes are shifted to consumers, such that producer and consumer taxes are the same. If you see some mechanism for corporate income taxes to shift to consumers instead of investors, please explain it.

[anglian]

RELATED - Why Tax Havens Can No Longer Be Tolerated
The Herald ^ | 14 April 2009 | 14 April 2009 http://www.freerepublic.com/focus/f-news/2229365/posts
“So, with complete predictability, the Gang of 20 promised to spend over a trillion dollars they don’t have to “stimulate” the world economy, to help struggling countries through the IMF (its record is so good at that), and other noble purposes. The G-20 also endorsed worldwide inflation by central banks and promised—I love this one—to “take action against” tax havens.

“The era of banking secrecy is over,” said the communiqué, as though that were a good thing. “We stand ready to deploy sanctions to protect our public finances and financial systems.”

The Obama administration led us to believe it was standing firm against a world regulatory authority, which was pushed by French President Sarkozy. But you be the judge. Here’s what the communiqué says:

“We each agree to ensure our domestic regulatory systems are strong. But we also agree to establish the much greater consistency and systematic cooperation between countries, and the framework of internationally agreed high standards, that a global financial system requires…. In particular we agree: … to establish a new Financial Stability Board (FSB) with a strengthened mandate, as a successor to the Financial Stability Forum (FSF), including all G20 countries, FSF members, Spain, and the European Commission…; to reshape our regulatory systems so that our authorities are able to identify and take account of macro-prudential risks; to extend regulation and oversight to all systemically important financial institutions, instruments and markets. This will include, for the first time, systemically important hedge funds; to endorse and implement the FSF’s tough new principles on pay and compensation and to support sustainable compensation schemes and the corporate social responsibility of all firms….”

And more—as if the regulators could have the requisite knowledge to manage economic affairs. This is a regulatory cartel, and to the extent it squelches competition among jurisdictions, it will produce all the evils of a coercive monopoly. That of course is the point. There is to be no safe haven where people can protect their wealth from the grasping politicians.”

The G(rasping)-20
By Sheldon Richman http://fee.org/articles/in-brief/goal-freedom-grasping20/

In defence of tax havens
http://www.adamsmith.org/blog/tax-and-economy/in-defence-of-tax-havens-200903063055/
Instead of trying to prevent competition between jurisdictions, the government ought to be asking why people are so desperate to escape the clutches of Her Majesty’s Revenue & Customs. And instead of just trying to prevent wealth from leaving the UK, they ought to be thinking about how they can attract more of it. Dan Mitchell of the Cato Institute has made a series of excellent YouTube videos on tax havens and tax competition: Tax Competition: A Liberalizing Force in the World Economy - http://www.youtube.com/watch?v=nJWLemN29Wc

The Economic Case for Tax Havens
Statist politicians and international bureaucracies such as the OECD and UN routinely attack tax havens, claiming that they lead to “harmful tax competition.” Yet at no point do critics bother to provide any evidence for this claim. This mini-documentary from the Center for Freedom and Prosperity looks at the empirical data and scholarly research and reports that tax havens actually have a very positive impact on the global economy.
http://www.youtube.com/watch?v=yi0lkJBTi58

The Moral Case for Tax Havens
http://www.youtube.com/watch?v=Xf14lkyH2dM Tax Havens: Myths vs. Facts
http://www.youtube.com/watch?v=aTfZADGK6TY&feature=channel_page

[ex-Texan]

No big deal and no problemo. Under U.S. law, if you have paid taxes there is no penalty. Or if your money was 'tax free' as in some types of litigation settlements: You may keep money off shore legitimately. At least that is what my tax lawyer told me.

Of course, if you are trying to hide from the IRS you are in big trouble.

Obama is saying, 'If you need money -- what people need to do is borrow more money. And bankers love loans. Support the Federal Reserve.' Zero is telling people to get a loan from one of his Zombie Banks:

Video: Humor -- Zombie Banks

[Arizona Carolyn]

I wondered how many posts before someone would post the obvious... you won the prize at post #7

[Arizona Carolyn]

Good luck with doing that. Our first banana republic election will be in 2010.. especially now that a SEIU lawyer is going to be running the FEC.

[Arizona Carolyn]

There was a time when our Republican representation was made up of businessmen and they WOULD be doing just that very thing, informing the nation what this really entails.

[pleikumud]

You wrote: “Companies don’t pay taxes, we do.”
..............
That’s exactly right, taxes are a cost of doing business and are passed along to consumers. The FairTax is the solution: Everyone, see www.FairTax.org and sign up.
The FairTax eliminates the entire federal income tax system and the IRS. There is legislation pending in Congress which is being held up by Obama’s Socialist Party. If millions of us demand the FairTax, Congress will have to listen. Tell your Congressmoron you will not vote for anyone who doesn’t support the FairTax.

[Arizona Carolyn]

Given their company HQ is in Illinois I would take especial interest in what would happen should they move offshore — say to Dubai like Halliburton did.

[Arizona Carolyn]

Given their company HQ is in Illinois I would take especial interest in what would happen should they move offshore — say to Dubai like Halliburton did.